RBI ECB framework, eligible borrower and lender categories, all in cost ceiling, minimum average maturity, end use restrictions, hedging requirements and reporting obligations for cross border lending to Indian entities.
Short, direct, on the record.
Under Track I (foreign currency ECB), the minimum average maturity is 3 years. Under Track II (long term), it is 5 years. Masala Bonds (Track III) require a minimum average maturity of 3 years. For ECBs up to USD 50 million from a foreign equity holder, the minimum average maturity may be reduced to 1 year.
Yes, provided the foreign parent qualifies as a recognised lender (typically requiring minimum 25% direct equity holding in the Indian company). The ECB must comply with all in cost ceiling, minimum average maturity, end use restrictions and reporting requirements. Inter company ECBs from foreign equity holders have specific relaxations on maturity for amounts up to USD 50 million.
ECB proceeds cannot be used for real estate activities, investment in capital markets, equity investment in India, on lending to entities for these prohibited activities, repayment of rupee loans (except under specific conditions), and general corporate purposes beyond a specified percentage. Infrastructure and manufacturing companies have broader end use permissions.
Yes, for ECBs with maturity of less than 5 years, the Indian borrower must hedge at least 70% of the outstanding exposure through financial hedges (forward contracts, options, swaps) with AD Category I banks. ECBs with maturity of 5 years or more are exempt from mandatory hedging requirements.
Share the borrowing entity, lender jurisdiction, proposed amount and end use for a preliminary assessment.